The Bang for the Birr: Public Expenditures and Rural Welfare in Ethiopia

This article explores the impact of different types of public spending on rural household welfare in Ethiopia. The analysis reveals that public spending on road infrastructure is characterised by relatively high, but regionally strongly concentrated, returns in terms of rural household welfare. This is quite in contrast to the returns to public expenditures in education, which have attributes of much wider reach but less intensity. Public investments in agriculture show results that are low in magnitude and in statistical significance, mostly due to a poor link between public expenditures in agriculture and productivity in the sector.